Communities in Mexico: What now?

A session at a Municipal Court on a juvenile justice question question.

With a new president from a different political party, what comes next? Mexico faces complex challenges as well as solid opportunities.

Andres Manuel Lopez Obrador is a clear front-runner in Mexico’s presidential race. His political group, MORENA, and its allies, Partido de Trabajadores (workers’ party) and Partido de Encuentro Social (conservative protestant party) are now predicted to perform beyond expectations, but there is still a question as to whether they will achieve an absolute majority in both federal legislative chambers. If they do manage to achieve a majority, the traditional autocratic presidential rule will continue at the federal level. Not so at the state and local level, for there will be a plurality of non-MORENA governors in office and local alliances differ from those at the federal level.

Significantly, the iron-clad party discipline of the last 80 years is in disarray. The issues affecting communities have some common features, but also are sufficiently different to demand tailored programs as solutions. Elite desires and programs that serve them will continue to clash with local priorities, creating tension within communities as they work to address concerns.

At the core is the question of how public resources will be distributed among the 32 states and the 2450 municipios. Averages for OECD countries show figures around 34.3% of GDP assigned to the central public sector. Mexico comes last in the OECD rankings; public tax and public agency revenues were at 17.2 % in 2016 and expenditures reached 20%, with the 2.7% difference made up by sovereign loans at an increased rate. It’s important to note that this comes at a time when world­-wide interest rates are expected to increase. If that prediction holds, new sources of locally generated public revenue would be necessary. With local and state governments traditionally receiving the lion’s share of their revenue from the central government, this means a big change.

Current account trade balances have been negative since the price of oil dropped. As price of oil has improved in 2018, trade balances have also improved but are still in the red. The forecast by OECD continues to show trade deficits for 2019 expressed as a percentage of GDP.

In this context, Mexico’s shift in political leadership must take the country in new directions to find economic and social stability. Each issue that affects the country has its own set of controlling factors and the solutions must be equally distinctive. Two examples are indicative of what may come next.

The Trade Balance

The US is Mexico’s main trading partner. NAFTA, a tri-partite agreement between the US, Canada and Mexico, is under re-negotiation, and the expectations are not good for this partnership. In response, Mexico is rapidly forging alliances in Asia and Pacific countries, with Europe and with China, creating a backup system to support the country’s international trade activity should NAFTA become a less beneficial partnership. While increased trade with additional trade partners is a positive development, Mexico cannot walk away from the US relationship even if the new trade arrangement proves less advantageous. I see this as an opportunity for creative, innovative venture investment by private international partners in different regions of the country, particularly for Canadian and US enterprises already actively involved with countries other than the US.

The Justice System

Local and state governments must strengthen their local control of justice administration, including prosecution, investigation, resolution and local public oversight of processes and results. This will not happen overnight, and the federal government will try to provide a cookie-cutter approach. The critical political challenge for communities in Mexico will be the extent to which they can work with the central authorities without acquiescing on key local needs. Politics and business may be more locally focused while still global.

Virgilio Pérez Pascoe

virgilio@pascoe.com

Virgilio Pérez Pascoe is a retired corporate executive who remains active in local community affairs in Cumming, GA and interested in understanding how groups develop their identity throughout the world. Virgilio’s focus is on developing an historical, anthropological, sociological and economic/business understanding of groups. His approach is to look to the future and determine what actions today will enable them to reach the outcomes they desire. Virgilio has lived in five countries in the Americas, Asia, and Africa as well as traveling extensively worldwide.